Q.A liability arises because of
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🔒 Start your 14-day free trial to unlock the full solution →Concept understanding — Journal Entry Format
Journal Entry Format – A First Look
Think of a journal entry as the first written record of any financial event in a business. When you buy a pen for ₹10, that's an event. When you take a loan from a bank, that's an event. Every such event must be captured in the journal before it goes anywhere else — the ledger, the trial balance, the final accounts.
The journal is called the book of original entry because this is where the story of each transaction begins.
The Everyday Intuition
Imagine you and a friend split a pizza. You pay ₹400 from your pocket. Later, your friend gives you ₹200. In your head, you know: "I spent ₹400, but ₹200 of that is really my friend's share." That's a two-sided story — one side is the pizza (the expense), the other side is what your friend owes you (a receivable).
A journal entry does exactly this: it records both sides of every transaction. One side is called the debit, the other the credit. Every transaction has equal debits and credits — always.
The Precise Meaning
A journal entry is a chronological record that shows:
- The date of the transaction
- The accounts affected (at least two)
- Which account is debited and which is credited
- A brief narration explaining the transaction
- The amount involved
The rule that governs every entry is the golden rule of double-entry bookkeeping:
For every debit, there must be an equal and opposite credit.
Why It Matters
Without journal entries, there is no trail. If a business records ₹1,00,000 as sales but never writes down where that money came from, the books are useless. The journal gives you:
- A complete audit trail — you can trace every rupee back to its source
- A chronological record — you know what happened and when
- A check on accuracy — because debits must equal credits, errors are easier to spot
In exams, journal entries are the foundation. Every subsequent topic — ledger posting, trial balance, final accounts — depends on getting the journal right.
The Format (Proforma)
Here is the standard format you will use in your exam:
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|---|---|---|---|---|
| 2024 Apr 01 | Cash A/c Dr. | 1 | 50,000 | |
| To Capital A/c | 2 | 50,000 | ||
| (Being business started with cash) |
Explanation of columns:
- Date – The day the transaction occurred
- Particulars – The names of accounts debited and credited. The debited account is written first, with "Dr." after it. The credited account is written below, indented slightly, with "To" before it.
- L.F. – Ledger Folio (the page number in the ledger where this account appears). You leave this blank in the journal; it is filled later when posting to the ledger.
- Debit (₹) – The amount being debited
- Credit (₹) – The amount being credited
- Narration – A brief explanation in brackets, starting with "Being..."
The narration is not optional in exams. Every journal entry must have a narration. It explains why the entry was made.
Accounting Treatment – Which Account is Debited and Credited
The decision of which account to debit and which to credit follows three fundamental rules, depending on the type of account:
1. Personal Accounts (accounts of persons, firms, banks, etc.)
- Debit the receiver
- Credit the giver
2. Real Accounts (assets, property, cash, goods)
- Debit what comes in
- Credit what goes out
3. Nominal Accounts (expenses, losses, incomes, gains)
- Debit all expenses and losses
- Credit all incomes and gains
Memorise this as "Debit the receiver, credit the giver" for personal accounts; "Debit what comes in, credit what goes out" for real accounts; "Debit all expenses and losses, credit all incomes and gains" for nominal accounts.
Worked Example
Transaction: On 1st April 2024, Rohan started a business with cash ₹2,00,000 and furniture worth ₹50,000.
Step 1 – Identify the accounts involved:
- Cash (Real account – asset)
- Furniture (Real account – asset)
- Capital (Personal account – the owner's claim)
Step 2 – Apply the rules:
- Cash is coming in → Debit Cash
- Furniture is coming in → Debit Furniture
- Capital is being given by the owner to the business → Credit Capital
Step 3 – Write the journal entry: …
A liability arises because of …
Correct option: credit transaction.
A liability arises because of a liability arises when something is bought/borrowed on c …
Showing the 12 most recent of 19 on this concept.
- CBSE 2026Set MARCH1 markMCQQ.When goods distributed as free samples __________ is credited.(a) Drawing account(b) Purchase account(c) Sales account(d) Salary account
›Reveal solutionSolution
When goods are distributed as free samples, the Purchase account is credited — option (b).
In the Kerala Plus One (DHSE) Accountancy recording of transactions, goods given away as free samples are a form of advertisement. The goods go out of stock at cost, so purchases must be reduced, and the cost is treated as an advertisement/sales-promotion expense. The journal entry is:
Date Particulars L.F. Debit (₹) Credit (₹) Advertisement (Free Samples) A/c ..... Dr XXX To Purchases A/c XXX (Being goods distributed as free samples) … - CBSE 2026Set ANNUAL1 markQ.Fill in the blank: Every debit has a corresponding ________.
›Reveal solutionSolution
Answer: credit.
Under the double-entry system, every transaction has two equal and opposite aspects, so every debit has a corresponding (equal) credit. …
- CBSE 2026Set ANNUAL1 markQ.State whether True or False: Double Entry System is an unscientific system of accounting.
›Reveal solutionSolution
The statement is False.
The double entry system records both the debit and credit aspects of every transaction, giving a complete, accurate and scientific record. So it is a scientifi …
- CBSE 2026Set ANNUAL1 markQ.State whether True or False: Process of writing transactions in journal is called posting.
›Reveal solutionSolution
The statement is False.
The process of recording transactions in the journal is called journalising. Posting is the process of transferring entries from the …
- CBSE 2026Set ANNUAL1 markQ.Answer in one word/sentence: What is the recording of transactions in the books of accounts called?
›Reveal solutionSolution
Answer: Book-keeping (journalising).
The act of recording business transactions in the books of account is called book-keeping; the specific recording of a transaction in …
- CBSE 2025Set MARCH1 markMCQQ.Tax that is levied on the inter state supply of goods and services in India is :(a) Central GST(b) State GST(c) Integrated GST(d) Union Territory GST
›Reveal solutionSolution
The correct answer is (c) Integrated GST (IGST).
Goods and Services Tax in India is a destination-based tax with three main components:
Type of supply Tax levied Intra-state (within a state) CGST + SGST Intra-Union Territory CGST + UTGST Inter-state (one state to another) IGST … - CBSE 2025Set ANNUAL1 markQ.State whether True or False: On Purchase from Soni for Rs. 1,000 his account will be credited with Rs. 1,000.
›Reveal solutionSolution
The statement is True.
When goods are purchased on credit from Soni, Soni gives the goods, so his personal account is credited (credit the giver) with Rs. 1,000 a …
- CBSE 2024Set MARCH1 markMCQQ.Journal is popularly known as(a) a) Primary books of accounts(b) b) Secondary books of accounts(c) c) Subsidiary books of accounts(d) d) Principal books of accounts
›Reveal solutionSolution
Correct option: (a) Primary books of accounts.
The journal is the book in which a transaction is recorded first, directly from the source document, before being posted to the ledger. Hence it is popularly called the primary book (book of original entry). The l …
- CBSE 2024Set MARCH1 markQ.Expand GST.
›Reveal solutionSolution
GST = Goods and Services Tax.
GST (Goods and Services Tax) is a comprehensive, single indirect tax levied on the supply of goods and services in India, which replaced many earlier taxes such as VAT and service tax. In accounting it is recorded …
- CBSE 2023Set MARCH1 markMCQQ.The process of entering transactions in a journal is called ________ .(a) Posting(b) Balancing(c) Journalising(d) Trial balance
›Reveal solutionSolution
Recording transactions in the journal is called journalising — option (c).
From the Kerala Plus One (DHSE) Accountancy chapter Recording of Transactions:
- Journalising = the process of recording a transaction in the journal by identifying the two accounts affected, applying the debit-credit rules, and writing the entry with a narration.
- Posting = transferring the debit and credit amounts from the journal to the respective ledger accounts (a later step). …
- CBSE 2022Set MARCH1 markMCQQ.The process of recording transactions in journal is called as ________.(a) Posting(b) Balancing(c) Journalising(d) Totalling
›Reveal solutionSolution
The process of recording transactions in the journal is called Journalising — option (c). This is a Plus One (Kerala DHSE) Accountancy recording-of-transactions basic.
The journal is the book of original (prime) entry. Recording a transaction in it — analysing the accounts affected, deciding which is debited and which is credited, entering the amounts and writing a narration — is called journalising.
Why the other options are wrong: …
- CBSE 2022Set ANNUAL1 markMCQQ.The account which is debited for payment of Life Insurance premium of the proprietor is(a) Life Insurance Account.(b) Insurance Premium Account.(c) Drawings Account.(d) Cash Account.
›Reveal solutionSolution
The proprietor's life insurance premium is a personal expense; paying it out of the business means debiting Drawings. The answer is (c).
By the business entity concept, the owner and the business are separate. A life insurance premium on the proprietor's own life is the owner's personal expense. When the business pays it, the amount is withdrawn for the owner's benefit, so:
Drawings A/c ... Dr
To Cash/Bank A/c
…
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